KEY POINTS
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Trump’s removal of Lisa Cook sparks a legal fight.
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Cook vows not to resign despite pressure.
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Markets eye potential Fed shift under Trump.
President Donald Trump said he would immediately remove Federal Reserve Governor Lisa Cook, escalating his battle with the US central bank. Trump accused Cook of making false statements on mortgage agreements and claimed constitutional powers allowed him to fire her.
Cook, who became the first African American woman on the Fed’s Board of Governors in 2022, rejected Trump’s decision.
She said the president had no authority to remove her and vowed not to resign. Her lawyer, Abbe David Lowell, called Trump’s move “illegal” and pledged to challenge it.
Trump’s bid to remove Lisa Cook sets stage for court fight
The unprecedented order raises serious legal questions about the limits of presidential power over the Fed. Experts say the White House may need to prove in court that it had cause to dismiss Cook. The Federal Reserve, which has been independent since 1951, has not commented on Trump’s announcement.
In a post on Truth Social, Trump said Cook had signed two conflicting mortgage documents in Michigan and Georgia. He described the actions as “inconceivable” and accused her of misleading regulators. The allegation was first made in a letter by Trump ally Bill Pulte, who urged the Justice Department to investigate.
Cook has denied wrongdoing, saying she first learned of the accusations in the media. “I have no intention of being bullied to step down from my position because of some questions raised in a tweet,” she said last week.
Trump’s Fed fight intensifies as markets react
Accoridng to BBC, the dispute adds to tensions between Trump and Fed Chair Jerome Powell, whom Trump has frequently attacked for resisting aggressive interest rate cuts. Investors reacted cautiously on Tuesday, with the US dollar weakening against major currencies in Asian trading.
Markets are watching whether Trump could use Cook’s removal to reshape the Fed toward a more dovish stance. “The key question is if Trump succeeds in replacing Cook, could he reshape the Fed’s composition?” said Julia Lee of FTSE Russell.
Japanese bank Mizuho’s strategist Shoki Omori warned that any successor might feel pressured to align with Trump’s economic agenda. “Powell as of now seems to be fighting back, but whoever comes next may just listen,” he said.
